The budget plan submitted to Gov. Dick Thornburgh and the Legislature "assumes no need to increase tuition," said Wayne G. Failor, vice chancellor for finance and administration. There are 14 universities, including Kutztown and East Stroudsburg universities, in the state system.

Overall, the budget proposes spending $529 million, with nearly $306.8 million, an increase of $36.3 million, coming from state taxpayers. The remainder comes from tuition, fees and federal and private grants.

Pennsylvania residents who are full-time students pay $1,600 this year for tuition. It is the second highest tuition rate in the country for students at publicly-owned colleges and universities.

In July, the board raised tuition by $30. Tuition has more than doubled since the 1973-1974 academic year, when it was $750.

The state funding is split into several appropriations. The largest chunk is the $290-million general education stipend that provides the basic state funding for the day-to-day operation of the system. The current state budget provides $263.8 million in this category.

The remainder comprises proposed special purpose funding, including $5 million for deferred maintenance, $4.1 million for instructional equipment, $1.1 million for library automation, $4.1 million for the establishment of a system-wide public service institute, $2.1 million for a new advanced technology curriculum and $350,000 for minority recruitment programs.

The budget plan includes the tentative contract settlement reached with the Association of Pennsylvania State College and University Faculties. The two-year contract, reportedly calling for pay raises totaling 10.5 percent over the period, is being voted upon this week by the 4,600 faculty members at the universities.

There was no comment by members of the board of governors during their public meeting yesterday, but one member, during a committee session that preceded the regular meeting, wondered what would happen if the system only got five percent of the 9.9 percent increase it sought for the general education portion of the budget.

"What happens. . . will tuition go up?" asked member Charles Potter.

Failor replied that the system would be short by $116 per student if the budget is not funded as proposed.

"That would be a $100 increase (in tuition)," Potter said.

Failor said the difference would have to be made up by increasing tuition, or cuts in the budget by the presidents of the universities, or a combination of a tuition hike and cuts.

Board members have voiced their concern that the system was becoming too expensive for moderate- and low-income students. Failor acknowledged that concern, but said the decision on how much funding the system gets is the Legislature's, not the board's.

"I don't mean to criticize, or anything like that, but the general assembly has made it public policy to fund at this level," Failor said, adding that the proposed budget increases the state's share while it drops the share shouldered by tuition.

Chancellor James H. McCormick said the system has to do a selling job to convince the Legislature to provide the full funding.

The budget, he said, "was an attempt to get down to basic needs. . . If we don't get the money, without a tuition increase and cuts, it's an impossible situation."

In addition to the overall spending plan, the board also proposed a $100.8-million capital projects plan. The capital spending plan provides for safety projects, such as $16.6 million for asbestos abatement, and for utility systems, renovation and building programs.

In other action, the board authorized the preliminary design and cost estimates for a new dormitory at East Stroudsburg University. The need for the dorm is clear, Failor said, but the study is needed to narrow the cost estimates.

The board also allocated funds for deferred maintenance at the universities. Statewide, $2.5 million was appropriated in the current budget, to be matched by funds from the universities.